Unique Contractor Grows In Many Directions

It’s hard to explain what enabled Sullivan & McLaughlin (Boston) to surge from $2 million annual sales in 1991 to $50 million and growing.

It can be summed up this way. The people who run the company like each other and their employees; their employees trust them and like them back. The McLaughlin brothers, Johnny and Hugh, learned from their father, John Sr., how to ask people to run through a wall for the greater good—and also how to find, keep and reward people willing to do just that.

Perhaps a few vignettes will paint a broader picture of the company:

- The company is known as “SullyMac.” Managers and employees refer to each other as “Hughey,” “Stevie,” and “Rudi.” The last moniker refers to John Rudicus, who, with his wife Katie (Hugh and Johnny’s sister), owns one-third of the company.

- Unlike most construction companies, this one has “employee days.” SullyMac’s annual event is replete with fun for the children and “job boards” that show family members details of the project each employee is working on. The boards feature dozens of professional photographs. Fun for kids includes rides, rock climbing, face painting, you-name-it. Roughly 450 people show up for this event, in a company with more than 200 employees. Cost: A significant multiple of $10,000.

- A company foreman and his family have had to deal with significant and constant medical attention needed by a now 2-year-old daughter. An employee explains how the company created a “match” program. (The McLaughlins do not mention this.) Employees could donate cash or working hours to the family; the hours would convert into cash. Bottom line: Employees kicked in more than $20,000, and SullyMac wrote a check for more than $40,000.

Growth is where they find it

Two-thirds of SullyMac’s revenues come from standard electrical work, the other third from voice-data-video. Johnny runs electrical, where roughly 100 projects per year bring in around $30 million; Hugh runs the VDV and systems operation, which, despite the recent decline last year, handled 300 projects, grossing around $12 million.

What about the rest? John Rudicus, 36, runs the $8 million service operation, annually handling 3,000 small electrical and VDV projects. The service operation is not just about waiting for phone calls: A current job sees SullyMac service people upgrading 229 branch locations for a bank in less than 3 months.

What is unusual about the management team’s approach is that they seem unafraid to take, or blaze, new paths. Some examples:

Voice-data-video: The VDV operation was early into premises wiring, but still kept looking for new growth markets. Hugh’s focus is not necessarily higher volume, but better margins. For example, the company moved into data centers at one point, harvesting work in the Boston area (from companies that have since flamed out). Now, 40% of VDV volume is in outside plant and fiber optic work.

While VDV profits are not as high as in the 1998-2000 boom, the company remains potent. In October/November (one month’s time), SullyMac landed $4.2 million in contracts for telecom work.

Security. SullyMac has taken on an industry manufacturer’s line, partially as the result of the contractor’s relationship with one of the area’s largest financial institutions. A new high-rise building under construction sees SullyMac electrical, VDV, and security operations at work together.

“We got into security before 9/11, and in 2002 we bid perhaps 30 jobs,” says Steve Hopkins, chief estimator. “Our philosophy is to push into new markets and to continue to grow.” Hugh says security will be a $5 to 6 million (sales volume) business inside of five years.

Line/power construction. Supplementing its agreement with the area’s “inside” union, IBEW Local 103, the company recently signed on with Local 104, which does “outside line” and substation work. SullyMac has successfully pursued such work and plans on continuing to move ahead in that market.

While the company sees transportation as a growth market, it has taken on a few substation jobs to “learn” about them—how to run them and how profitable they might be. Additionally, there is a “synergy” between the expertise of Local 104’s journeymen and the VDV outside plant work.

Backing these explorations is the main dog: electrical construction.

Management styles

Spending a day or two with the brothers emphasizes their differences. Hugh, 38, is mercurial, inquisitive, full of energy. “One of my charges,” he says, “is always to reinvent ourselves.” On the other hand, 33-year-old Johnny seems intelligent, patient and also gives off a welcoming sort of glow.

“I’m the worst manager in this place,” his brother Hugh says, laughing, “and Johnny’s the best. He’s ‘think think do.’ I’m ‘do do think’!” Johnny’s patience and personality—his management style—seem to net more field productivity than others might have with the same work force.

Example: In the summer of 2002, the 20 electrical foremen were wearing out Johnny’s cell phone, each requesting more journeymen. Yet SullyMac had 100% of its core electricians at work and, perhaps eyeing a possible economic downturn, did not want to add people.

Result: Johnny was putting his foremen off and, also, ticking them off. He wasn’t sending the help they needed. Important work would not get done on time—was he mad?

Solution: An early-morning meeting, in which Johnny McLaughlin brought all 20 foremen together. “We started talking about who needed three men for a week, and who needed two men for two weeks, and so forth,” he remembers. “I started the conversation, but soon the foremen jumped in and began resolving the problems amongst themselves. The result was that the group made some very good decisions,” he said.

“I think if I had made the same exact decisions, no one would have been happy with them!”

“We’re lucky to have people like this working for us, who will take this responsibility on themselves. A lot of this came from my father. The guys who built this company with him cared and created a ‘can do’ attitude that continues today.”

What happens next?

Sullivan & McLaughlin faces an interesting future. There are no plans to take on work in other locales; yet there are obvious limits to growth in the Boston metro area. They’ve got to find new, high-profit areas, with transportation and substation work the latest candidates.

“If this company wanted to, it could probably do $125 million one of these years,” says chief estimator Hopkins. “But the focus here is not on volume, but on profitable growth.”

A most remarkable thing about the McLaughlins and Rudicus is their collective ability to listen and take advice. Asked about receivables SullyMac wrote off after the telecom bust—its data center customers have mostly disappeared, Hugh noted there was little damage.

“It was a bit less than 1% [of receivables],” he says. “Don Mitchell, a former bank executive who works at SullyMac three days a week, saved our bacon. He kept after me about receivables, so we never let it get out of hand.”

SullyMac’s story since 1991 can be summed up this way: Growing rapidly, being unafraid to look at new ideas and move in new directions, and never letting things get out of hand. EC

SALIMANDO is a Vienna, Va.-based freelance writer and frequent contributor to ELECTRICAL CONTRACTOR. He can be reached at jsali@cris.com.

Managing, SullyMac Style

Sullivan & McLaughlin actually has a management style, which some contractors might not be able to claim. Here are some interesting moves:

An advisory board meets quarterly; it includes outsiders and insiders, including Chairman Don Mitchell, formally a senior vice president of a major bank. This board’s ostensible mission is to “protect the interests of John McLaughlin Sr.” If the company survives and thrives, John Sr. will be paid 100% of the promised purchase price for the company he co-founded more than 40 years ago.

But the board helps the three young company honchos gain perspective on key issues, new markets, and important decisions. The board has no authority—but members are paid a significant sum for each meeting and take the work seriously.

Sullivan & McLaughlin joined a peer group of other union electrical contractors. This helps Hugh, Johnny and Rudi gain perspective on where the company stands and what it can do better. Also, it allows them to exchange ideas with contractors from other areas.

There is also the mentoring program. At times, SullyMac has hired a person that the trio thinks has talent and potential value. They then rotate that person through various departments within the company to see where there is a fit. This is similar to a pro football team’s draft strategy of taking the best athlete available and worrying later about what he can do.

Example: Jeff Flynn, a former Marine captain, was referred to the company and, upon interviewing, well-liked. He rotated through various company areas. Result: Flynn is now a crack estimator for the telecom division.

Another success is Peter DiMartino. DiMartino, 24, held numerous positions within the company, including CAD operator and assistant project manager. The company discovered he had a natural ability with numbers. Now, he works as an accountant for SullyMac, while pursuing his college degree at night.

When John Sr. decided to sell the company to his children, the intensive long-term succession planning included insight from former banker Mitchell, plus an industry psychologist and an attorney with succession expertise. The result: A harmonious decision to divide the company into thirds—one each for Hugh, Johnny and Katie and Rudi, with Rudi serving as the third managing partner.

Bringing Rudi into the company’s leadership has been a blessing. While the McLaughlins were raised by an electrical contractor and have worked at their company since 1991, Rudicus comes from corporate America, having worked with financial companies, including insurance firm AIG).

As a result, the company gained a corporate perspective on services it offers and customer relations. Rudi created an “account team” philosophy in service, with the company assigning a specific journeyman (and a back-up) to repeat customers. This makes it easier on the customer, and also increases service work productivity. —JS

Doing Things Differently

Unusual things are routine at Sullivan & McLaughlin. This is typified by a quote from General Foreman Butch Ramsey, which graces Johnny McLaughlin’s wall: “When donkeys fly, don’t criticize how high.”

For example, unlike most electrical contractors, the company has a promotional kit that includes a CD-ROM about SullyMac, marketing materials highlighting the various divisions and expertise of the company, and a new Web site.

Two years ago, SullyMac purchased Norton Electric. “They had long-term relationships with their customers; many had been with Norton for 30 years,” Johnny says. “Much like SullyMac, the people who worked there take ownership of their accounts and we like that.”

Many employees, including project managers and foremen, are interviewed by a psychologist and take aptitude tests. Along with their employees, Johnny, Hugh, and Rudi have all done the same thing and learned something about themselves in the process.

Doubling bid effort

In 2002, the McLaughlins say, they “could see the market imploding.” As a result, they geared up to bid double the amount of work bid in 2001. This resulted in more growth in the electrical market.

Before doing this, things had to change internally. In late 2001, the company junked its project manager/estimator approach—instituting an estimating department, with Hopkins as chief. “It wasn’t working the old way, as we grew,” Hopkins says.

“The PM/estimators were so busy running the projects we had won, they couldn’t find time to bid future work we wanted,” he says. “General contractors who worked with us weren’t getting the prices they needed in a timely manner.”

Switching to the estimator-only system has, Hopkins says, increased estimating productivity by around 30%. —JS